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Google's $8.5m class-action privacy payout goes to: Lawyers' alma maters, web giant's pals

Basically: Not you, just 'the usual suspects'

By Kieren McCarthy, 23 Aug 2017

The US Ninth Circuit Court of Appeals has narrowly approved an $8.5m Google payout for privacy violations following a lengthy argument over who should receive the money.

Despite the class-action lawsuit being brought on behalf of roughly 129 million folks in the US who Googled between 2006 and 2014, none of the money will actually go to them but will instead be split between the attorneys and organizations they have designated.

It just so happens that, as part of a settlement, three of those seven "cy pres recipients" are the alma maters of the attorneys: cash-strapped Harvard University, Stanford University and the Chicago-Kent College of Law.

The others named in the settlement are AARP Inc, Carnegie Mellon University, the MacArthur Foundation and the World Privacy Forum – all of whom are frequent recipients of Google's corporate largesse.

The proposed provision of funds has repeatedly fallen foul of the judges in charge of the case. Back in 2014, US District Judge Edward Davlia complained about the disbursement: "The elephant in the room is that many of them are law schools that you attended," he said, adding, "I'm disappointed that the usual suspects are still usual."

In case you are wondering how those organizations were chosen, you're not the only one. Davlia noted the complete lack of transparency over where the $6.5m not being awarded to the lawyers was going, and said it "raises a red flag" and "doesn't pass the smell test."

The case

The actual case and settlement is over Google violating users' privacy by revealing their search terms to third-party websites. The search terms included things like people's real names, addresses, and credit card numbers.

But when Google agreed to settle the case – handing $2.1m to the attorneys and $6.5m to the "cy pres recipients" – both sides agreed it was not possible to provide that money to actual Google users because all of them would have to "get something" for it to be a legitimate settlement. The settlement amount per user would be roughly five cents (the lawyers claim four cents) and there would likely be huge distribution and advertising costs in getting it to people.

That explanation, and the final recipients, have been repeatedly questioned, however.

Ted Frank of the Competitive Enterprise Institute attended the most recent hearing and argued that there was a clear conflict of interest in attorneys listing their alma maters as recipients. He argued that the money should be given to charities rather than extremely wealthy universities.

And by arguing that it wasn't possible to pay any money to users because it was an all-or-nothing situation where every user would have to get something, Frank argued that the case could effectively undermine every future consumer class action lawsuit and funnel hundreds of millions of dollars to organizations chosen by lawyers.

Other groups also opposed the agreement. The Electronic Privacy Information Center and Consumer Watchdog complained that Google users will get nothing and the settlement money would have no impact on Google's behavior because the amount was so small compared to its revenues and profits.

The lawyers' arguments for the recipients that they and Google's lawyers had chosen were that each of them works on privacy issues and each will track how the money is spent. So a degree of transparency is included. That transparency argument was what sparked Judge Davila to note that it didn't "pass the smell test."

Stink

One of the three appeals court judges asked specifically about the "smell test" comments made by Judge Davila. In response, Kassra Nassiri (who went to Harvard Law School and then did a masters at Stanford) argued that the fact that the question had been raised at all indicated that it was not a rubber stamp process.

He noted that the six recipients had supplied over 100 pages of proposals walking through what they would do with the money and how it related to privacy issues. He argued: "I don't know that anything more could have been done, or that more has ever been done in a case like this, to determine that the selection of the recipients was on the merits." (Although we at The Reg would like to note that we would be happy to produce 200 pages of proposals in return for $1.1m in cold, hard cash.)

In the end, on Tuesday this week, the appeals court split 2‑1 with Judges Margaret McKeown and Jay Bybee approving the settlement and Judge Clifford Wallace dissenting.

Wallace was unhappy that nearly half of the settlement is going to the lawyers' former universities and said that he wanted to see sworn testimony that their inclusion has nothing to do with settlement negotiations.

The lawyers has previously promised in court that multi-million-dollar payoffs to their old schools had nothing to do with the deal, but Wallace noted that this was "nothing more than unsworn lawyer talk during an oral argument." He added: "My experience as a trial judge taught me to be skeptical of unsworn statements from lawyers, especially when it comes to conflict of interest issues."

However, Judge McKeown argued that the universities in question "have the kind of centers that are relevant here" and said she didn't see "enough of a connection" to decide it represented a conflict of interest.

Wallace noted that "the people whose millions of dollars are involved are not represented." ®

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